This set of Production Planning and Control Multiple Choice Questions & Answers (MCQs) focuses on “Sales and Operation Planning”.
1. A firm can vary supply of product by controlling _____
a) production capacity and price promotions
b) production capacity and inventory promotion
c) price promotion and inventory
d) product capacity and inventory
View Answer
Explanation: By controlling inventory, materials can be used for production of different products and also if capacity of the product is controlled then the firm can produce different types of products.
2. An increase in the consumption of the product either from new or existing customer is _____
a) forward selling
b) forward buying
c) stealing share
d) market growth
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Explanation: If there is an increase in the purchase or consumption of the product of a firm by an old customer or new customer then there will always be growth of the company in the market.
3. As the product margin declines, promoting during the peak demand period becomes _____
a) less profitable
b) more profitable
c) less of a risk
d) more desirable
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Explanation: When the product margin is declining then the firm should take a step to find the solution rather than promoting, it will result in the decline of the profit.
4. What is the effect on average inventory during sales?
a) Increases if a promotion is run during the off peak period
b) Increases if a promotion is run during the peak period
c) Decreases if a promotion is run during the peak period
d) Decreases if a promotion is run during the off peak period
View Answer
Explanation: The maintenance of inventory should be done regularly keeping that in mind that demand can occur anytime. So, if a promotion is run during off peak period then there will be decrease in the average inventory.
5. What is called as moving the future purchases to the present?
a) Stealing share
b) Forward buying
c) Market growth
d) Forward selling
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Explanation: Moving the future purchase to the present is the purchase of inventory or assets in excess quantity so as to counter the future price rise and this is called forward buying.
6. What is it called when a customer substitutes a firm’s product for a competitor’s product?
a) Forward selling
b) Forward buying
c) Stealing share
d) Market growth
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Explanation: When a customer substitutes a firm’s product for a competitor’s product it means the product which their firm is producing is used to increase the value of other firms and increase their market value which results in increase in the share value of the other firm.
7. When the fraction of increased demand coming from forward buying grows, offering the promotion during the peak, then what is the behavior of demand period?
a) It becomes less significant
b) It becomes more significant
c) It becomes more attractive
d) It becomes more profitable
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Explanation: When there is increase in the forward buyers it means that the product is growing in the market which results is increase in the purchase or the product in the present.
8. In which approach to manage capacity, a firm has a flexible production line whose production rate can easily be varied?
a) Use of seasonal workforce
b) Use of subcontracting
c) Designing product flexibility into the production process
d) Time flexibility from work force
View Answer
Explanation: Designing the product flexibility in the production process means making different designs of the product while the production process is going on which results in variation of production rate.
9. In which approach, a firm subcontracts peak production so that internal production remains level and can be done cheaply?
a) Time flexibility from workforce
b) Use of subcontracting
c) Use of seasonal workforce
d) Designing product flexibility into the production process
View Answer
Explanation: When there is very high demand of the product then the firm needs to subcontract during the peak production which means it employs a firm outside the company to do the work for the larger project.
10. Pricing decisions based only on revenue considerations often result in _____
a) A decrease in overall profitability
b) A decrease in supply chain revenue
c) A decrease in overall revenue
d) An increase in overall profitability
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Explanation: If a pricing of a product is done according to the revenue, then the product might not grow in the market. People are concerned with the quality and price on the product. So, there will be a decline in the product purchase which will lead in decrease in the overall profitability.
11. How can supply chains influence demand?
a) By using production capacity and inventory
b) By using production capacity and inventory promotions
c) By pricing and other promotions
d) By price promotions and inventory
View Answer
Explanation: If the supply chains increase the price then there will be decrease in the demand of the product and if the price is reduced then there will be increase in the demand and proper promotions should be done to increase the demand of the product.
12. The key to which capacity management approach would involve having both volume and variety flexibility to be sustainable?
a) Time flexibility from workforce
b) Use of subcontracting
c) Use of seasonal workforce
d) Designing product flexibility into the production process
View Answer
Explanation: When the workforce is maintained at some level then and the flexibility of time is utilized to produce flexible products then both volume and variety flexibility remains sustainable.
13. The pricing and promotion decisions are made by _____ team.
a) marketing and operations
b) marketing and sales
c) marketing, operations and sales
d) operations and sales
View Answer
Explanation: The pricing of the product is done after the survey of the product in the current market and the demand among people. And the promotion is done if the product is new or competing with same type of product with other firms.
Sanfoundry Global Education & Learning Series – Production Planning and Control.
To practice all areas of Production Planning and Control, here is complete set of Multiple Choice Questions and Answers.
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